The High-Tech Innovations That Will Ease the Wireless Data Supply Crunch

Published Wed, Jun 8th, 2011   Justin Fritz, Executive Editor

“We’re beginning to hit the fundamental limits of the current technology.”

So says David Richardson of the University of Southampton’s Optoelectronics Research Center. He was referring to the amount of capacity in fiber-optic cables, noting that the current rate of data consumption could outpace fiber-optic cable capacity sooner than anyone anticipated.

A big reason for the spike in usage and strain on the system?

Smartphones, which use 24 times more data traffic than conventional mobile phones.

And wireless carriers are definitely feeling the pressure…

The Mobile Capacity Crunch

Take AT&T (NYSE: T), for example, whose mobile data volume surged by 8,000% between 2007 and 2010.

At a Senate hearing earlier this month regarding its acquisition of T-Mobile, AT&T CEO, Randall Stephenson, said data constraints were a key factor in its decision: “To meet growing demand, we have to find ways to get more capacity from the existing spectrum, which this merger will do.”

The company has also launched 24,000 free Wi-Fi hotspots to lighten the load on its 3G networks.

It’s not alone.

Verizon (NYSE: VZ) also recently announced that it’s planning to use Wi-Fi to offload data. And it’s boosting fiber capacity, too. In fact, its supplier, Corning (NYSE: GLW), has “actually sold out of fiber,” since Verizon has boosted orders by 20%.

T-Mobile – a carrier I’ve praised for its customer-centric practices – is scrapping its unlimited data plan. Plus, since its 900,000 4G customers now use one gigabyte (GB) of data per month, it’s upgraded 70% of its data network infrastructure.

But besides limiting access to data, offloading to Wi-Fi and beefing up capacity, how else can carriers get more mileage out of their current fiber networks?

One word: Speed.

I Feel the Need… the Need for 4G Speed

All the major carriers are offering – or at least preparing to launch – 4G data speeds. And you can see why, given that British communications regulator, Ofcom, estimates that 4G can deliver around 230% more data than 3G, while using the same amount of fiber-optic spectrum.

Makes sense. If everyone would just drive faster (and better) on the highway, you wouldn’t need more lanes.

According to Ofcom’s CTO, “This increased efficiency means that 4G networks will be able to support increased data rates and more users. [They] will be 3.3 times (230%) more spectrally efficient than today’s standard 3G networks [and] approximately 5.5 times (450%) by 2020.”

The only problem? With mobile data nearly doubling every seven months, that’s still not going to cut it.

But this might…

68,000,000% Faster Should Do the Trick

Here are two ways that carriers can pick up the slack:

~ POLO 40G: Last month, internet semiconductor provider, PMC-Sierra (Nasdaq: PMCS), unveiled a solution for carriers to enhance existing bandwidth – the POLO 40G.

Put simply, this technology allows carriers to unlock the fastest and most efficient bandwidth – coherent optical networking – to everyone, while reducing power consumption by more than 50%.

As PMC’s product marketing manager says, “POLO takes coherent networking away from niche deployment, where it is only used on the most important routes, to something that can be deployed broadly.”

Plus, as the press release stated, it cuts “capital and operating expenses by deploying bandwidth using existing fiber.”

~ One Laser… 26 Terabits of Data Power: Earlier this year, Japanese scientists set a world record by achieving a data speed of 109 terabits per second.

Not to be outdone, however, researchers at Germany’s Karlsruhe Institute of Technology set another record. While they “only” reached 26 terabits per second, they did so with a single laser, compared to the Japanese, who used multiple lasers.

To put that in perspective, it’s essentially the same as blasting 700 DVDs through cyberspace in an instant. Or as one of the researchers said, it’s the “amount of data that would be generated by 400 million people making a phone call.”

And the laser’s 26 terabits represents a ridiculous 68,000,000% increase over Verizon’s 4G download speed.

I won’t bombard you with the technical details, but suffice it to say, it’s not just some zany science project. As BBC News points out, the technology “could be integrated onto a silicon chip, making it a better candidate for scaling up to commercial use.”

Of course, speed can only get us so far. Ofcom warns that “spectrum efficiency won’t be enough to keep pace with demand growth” and that expanding the network infrastructure is also necessary.

But I’d say that the kind of power boost that this technology can provide represents a pretty good start.

Good investing,

Justin Fritz